In his television cycle, Jonathan Viale carried out a fierce analysis of the credit loans that the national government has been taking throughout the year. The journalist surprised by showing a timeline that shows how the libertarian administration has been going into debt by requesting loans from different organizations and financial entities. The media questioning was spread on social networks, taking into account the known affinity of the son of the renowned Mauro Viale with the management of Javier Milei.
“Where is the money? What was done with it?” Viale asked and continued: “A lot of dollars came in, but…”. Using a football analogy about the sales of River Plate players, the journalist questioned the national government about the reserve deficit in the BCRA. A sneaky criticism of the minister’s maneuvers Luis Caputo that used the various financial contributions to maintain the dollar exchange line without increasing reserves.
“Until now there have been many rescues, many rescues,” said the host in his TN television cycle and detailed: “You had money laundering, 20 billion dollars; you had the IMF disbursing 12 billion dollars; you had the field that liquidated 7 billion dollars with zero withholdings and, now, you have the Treasury that promises this swap of 20 billion dollars. It’s not that there was a lack dollars. The government was getting different bridges, but reserves were never accumulated and we always ended up asking for more and faster and faster.”
Since coming to power, the Milei administration mounted a financial strategy that combined three axes to generate inflows in dollars: an important international financing program, a massive laundering of undeclared savings, and measures to “remonetize” the informal economy in foreign currency. The backbone of this strategy was designed by Luis Caputo.
One of the most visible pillars was the agreement with the International Monetary Fund (IMF). This year, the minister announced a plan to obtain a loan of US$20 billionintended largely to reinforce the reserves of the Central Bank (BCRA) and thus support a new exchange rate scheme. According to the official, these funds “are not going to finance expenses but to recapitalize the assets of the Central Bank,” he stated. For his part, Milei justified the agreement by pointing out that this could raise the BCRA’s gross reserves “to at least 50 billion dollars.”
However, this reinforcement of reserves was key to one of the most ambitious objectives of the new government: making more flexible or eliminating the exchange rate “trap” that limited the purchase of dollars and the mobility of capital. With IMF dollars, the government projected an exchange rate regime with broader bands (between 1,000 and 1,400 pesos per dollar) to allow a freer float. At the same time, the economic portfolio promoted a large laundering of dollar savings to capture foreign currency that citizens kept “under the mattress” or outside the formal system.
In the first stage, the minister announced that more than US$22.5 billion. This massive income was celebrated by the Executive as a sign of confidence in the new economic model. In May, the government launched the “Historical Reparation Plan for the Savings of Argentines”which allows citizens to use their undeclared dollars without having to justify their origin. The Mileista administration defended this initiative as a “regime change” that seeks to respect financial freedom. “It is a regime change that aims to return the freedom of their savings to the vast majority of Argentines who were abused by excessive taxes and excess regulations,” they stated in Casa Rosada. But, so far, this income in US banknotes has not increased the meager coffers of the Central Bank.
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